I came across this really interesting article on how India is now the second-largest smartphone manufacturer in the world. To start with, India is the world’s most populous nation with over 1.4 billion people, a quarter of whom are between 15-29 years old. This demographic advantage, combined with rising disposable income and government-backed policies, has positioned India as a key global player in electronics manufacturing, particularly in smartphones.
1. India’s Rise in Smartphone Manufacturing:
- A decade ago, India met only 25% of its domestic mobile phone demand, relying heavily on imports.
- Today, domestic production meets 97% of demand, with manufacturing value soaring from $3 billion (FY15) to $49 billion (FY24).
- Exports have skyrocketed, making smartphones the fourth-largest export item from India in 2023-24.
- India is now the sixth-largest smartphone exporter in the world.
2. Key Drivers of Growth:
- Government Incentives:
- Production Linked Incentive (PLI) Scheme: Grants financial incentives to manufacturers, drawing major players like Apple, Samsung, and Foxconn to India.
- Phased Manufacturing Programme (PMP): Supports local component production to reduce reliance on imports.
- Make in India: This initiative has driven mobile phone shipments to 2 billion+ units between 2014-2022.
- China+1 Strategy:
- Due to geopolitical tensions and supply-chain risks, companies are moving production out of China.
- While China and Vietnam saw declines in mobile phone exports, India’s exports grew 40% in 2023-24, gaining from the global shift.
- Domestic Demand & Cost Efficiency:
- The Indian market, valued at $36 billion (FY24), continues to grow at a 13% CAGR.
- Low labor costs attract both domestic and international investment.
3. Challenges & Global Competition:
- Electronics exports account for just 4.7% of India’s total exports, compared to China’s 27% and Vietnam’s 40%.
- High import tariffs on components and limited participation in global value chains (GVCs) remain key hurdles.
- To compete, India must further streamline policies and develop a robust domestic supply chain.
4. The Road Ahead:
- India aims for $300 billion in electronics production by 2025-26, with mobile phones contributing 40% of this target.
- With exports now exceeding imports, India has transitioned into a smartphone manufacturing powerhouse.
- Further policy support, skill development, and infrastructure upgrades will be crucial to securing India’s position as a global hub.
Would love to hear from the community – Do you think India can become the next big global manufacturing hub? What policies or reforms could further accelerate this growth?